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Cadbury hikes 40% on Kraft takeover bid, puts FTSE 100 close to new 2009 highs

Published: 12:43 07 Sep 2009 BST

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Overview: The news was dominated by American food giant Kraft’s £10.2 billion takeover proposal for British confectionery maker Cadbury (LSE: CBRY), which promptly turned down the bid, saying it undervalued the company. Kraft, which owns a number of major confectionery brands, including the Toblerone chocolate and Oreo cookies, is now expected to come back with an improved bid for Cadbury, whose stock spiked over 40% on the news, reaching 802p per share to eclipse the offered 745p.

The move also bolstered other food groups, including Unilever (LSE: ULVR) and Associated British Foods (LSE: ABF), which released a pre-closing trading update today, tacking on over 4%.

The leaderboard was otherwise mixed.

Platinum miner Lonmin (LSE: LMI) made it to the top three, trailing only Cadbury with a 4.4% gain. Banking group Lloyds (LSE: LLOY) was among the leading gainers with a 3.2% as the bank is reportedly mulling raising more cash.

Telecom companies Cable & Wireless (LSE: CW) and BT Group (LSE: BT) also showed up among the leaders, both advancing around 3%.

Today’s big gainers, primarily Cadbury, helped the UK’s blue chip index tack on over 70 points, reaching 11 month highs.

No FTSE 100 constituent shed more than 1% today. Specialty biopharmaceutical company Shire (LSE: SHP) and insurer Friends Provident (LSE: FP) were the leading fallers with declines of 0.8%. Another insurer Standard Life (LSE: SL) and Thomson Reuters (LSE: TRIL) also lost just less than 1%.

No news is expected to come out of the United States today as US markets are closed due to the Labour Day Bank Holiday.

Commodities

Key benchmarks slightly improved from the Friday levels. US light crude was just above US$68/barrel, while Brent Crude rose to US$66.9/barrel.

Higher prices helped most oil and gas stock to increases in early trade.

British Petroleum (LSE: BP) and fellow supermajor Shell (LSE: RDSB) added less than 1%, as did Petrofac (LSE: PFC).

BG Group (LSE: BG) improved 1.7% to 1,025p per share, as did fellow FTSE 100 constituent Cairn Energy (LSE: CNE). Tullow Oil (LSE: TLW) outperformed oil and gas blue chips with a 2.75% improvement.

Sector peers from FTSE 250 also were in the positive. Dana Petroleum (LSE: DNX) and Heritage Oil (HOIL) both posted gains of a little over 1%, while Dragon Oil (LSE: DGO) rose marginally.

Juniors didn’t show much movement in early trade.

Europe focused oil and gas developer Ascent Resources (AIM: AST) emerged as the leading faller with a 6.7% loss. Diversified energy investment company Xtract Energy (LSE: XTE) followed with a 4.1% dip, correcting after making good gains on Friday.

Notable risers included Iraq and Algeria operating Gulf Keystone Petroleum (AIM: GKP) and Latin American focused producer Gold Oil (LSE: GOO), which both climbed 4%.

Precious metals miners strong on higher prices

Gold remained high, holding on to last week’s gains while other precious metals also rose.

Gold was at US$993/ounce, while Silver improved further, going up to US$16.30/ounce. Platinum retreated to US$1,253 after reaching US$1,255 earlier.

Miners were lifted by the continued increases in precious metal prices.

Platinum miners were once again in the lead as blue chip Lonmin (LSE: LMI) climbed 4.7% and midcap Aquarius Platinum (LSE: AQP) tacked on 2.1%.

Gold miners also started the day in the positive, but their gains weren’t as impressive. Randgold Resources (LSE: RRS) rose marginally, while mid tier gold producer Peter Hambro Mining (LSE: POG) was up 1.7%. Yamana Gold (LSE: YAU) was flat.

Silver producer Fresnillo moved against the tide, sitting just below the opening level, while fellow silver miner from FTSE 250 Hochschild Mining (LSE: HOC) was strong, climbing almost 4%.

Specialty platinum firm Johnson Matthey (LSE: JMAT) added 1.6% on top of Friday’s gains.
Juniors once again were able to put up good gains.

Lesotho operating diamond miner Kopane Diamond Developments (AIM: KDD) was firmly in the lead, soaring as much as 100%. Fellow diamond producer Firestone Diamonds (AIM: FDI), which operates in South Africa and Botswana, jumped over 10%.

Uzbekistan focused gold miner Oxus Gold (AIM: OXS) also got off to a great start, rallying 19%.

Turkey and Saudi Arabia operating gold explorer KEFI Minerals (AIM: KEF) and Africa operating gold and platinum recovery specialist Goldplat (AIM: GDP) followed, climbing 12.5% and 11.9%.

Philippines focused gold producer Medusa Mining (AIM&ASX: MML), which released its full year results today, and Metals Exploration (AIM: MTL), which also operates in the Philippines, rose 5.6% and 6.7% respectively.

Precious metal explorer, Mariana Resources (AIM & PLUS: MARL), rose over 10% after confirming it had commenced drilling at its wholly owned Dos Calandrias gold-silver project in Argentina.

Base metal miners rise as prices hold steady

Base metals prices were headed in different directions this morning. Copper improved to US$2.87/pound, while Nickel retreated to US$8.10/pound, and Zinc got back to the US$0.86/pound.

All major base metals miners gained about 1-2% in early trade.

Blue chip copper miners Kazkahmys (LSE: KAZ) and Antofagasta (LSE: ANTO) both added almost 2%, as did Vedanta Resources (LSE: VED) and Xstrata (LSE: XTA). World’s largest miner BHP Billiton (LSE: BLT) added 1.7%.

Rio Tinto (LSE: RIO) and Anglo American (LSE: AAL) both were just a little over 1% above the opening level.

Juniors generally did well.

Zinc producer Connemara Mining (AIM: CON) was in the lead, rallying 22%. Tunisia focused metal miner Maghreb Minerals (AIM: MMS) followed with a 14% climb.

Botswana operating nickel and copper miner Discovery Metals (AIM: DME) also basked in the sun, adding almost 9%.

Copper and nickel explorer Regency Mines (AIM: RGM) and copper and gold miner EMED Mining (AIM: EMED) failed to catch any momentum from the positive movements in the sector, dropping over 3% each.

Banks, insurance, private equity

Banking stocks made some progress in the morning, while insurers were mixed.

Lloyds (LSE: LLOY) was among the leading risers in the blue chip index with a 3% improvement, while fellow partly nationalised banking group Royal Bank of Scotland (LSE: RBS) rose marginally, as did HSBC (LSE: HSBA).

Barclays (LSE: BARC) improved 2%, while Standard Chartered (LSE: STAN) slipped into the red early.

Insurers Legal and General (LSE: LGEN) and RSA Insurance Group (LSE: RSA) outperformed their peers, climbing 2.7% and 1.6% respectively. Old Mutual (LSE: OML) followed with a 1.3% gain.

Aviva (LSE: AV) and Prudential (LSE: PRU) added less than 1%, while Friends Provident (LSE: FP) was 1% down and Standard Life (LSE: SL) declined marginally.

Private Equity group 3i (LSE: III) added less than 1%.

Large and Mid Cap News

Kraft Foods Inc (NYSE: KFT) said Cadbury PLC (LSE: CBRY) has rejected a bid for the company valuing the confectionery maker at £10.2 billion, adding it hopes to engage with the board of Cadbury on a constructive basis with the goal of consummating a recommended transaction.

Shares in Philippines focused gold producer Medusa Mining (AIM&ASX: MML) were in demand this morning after the Australian miner released its full year report, saying its revenues doubled as output and resource inventory increased, positioning Medusa for further growth.

Associated British Foods PLC (LSE: ABF) said trading in the second half has been strong and it expects “some progress in adjusted earnings for the full year” to September 12 2009.

Pubs, hotels and restaurants group Whitbread PLC (LSE: WTB) reported a 2.4 percent rise in sales for the 24 weeks to August 13 2009 from the same period a year earlier, however, on a like-for-like basis, sales were down 2.6 percent year-on-year.

Kier Group PLC (LSE: KIE) said it signed a contract with North Tyneside Council to repair and maintain its social housing stock and other council-owned property for an initial ten-year term. The contract has a potential value of over £600 million which could increase as the contract is extendable for a further five years.

Small Cap News

Regal Petroleum (AIM:RPT) has announced the successful spudding of their Ukrainian SV-61 development well. SV-61 is the third 'new generation' well to be spudded on the Company's Ukrainian licences using the new 2,000 bhp, top-drive.

Goals Soccer Centres plc (AIM:GOAL) announced positive interim results  for the 6 months ended 30 June 2009. The AIM listed operator of 5-a-side soccer centres across the UK, Goal Soccer currently operates 33 centres and has a pipeline in excess of 40 new development sites.

NetPlay TV plc (AIM: NPT) continued its recent pace of contract wins for its interactive TV gaming products this morning, announcing that it had signed a five year broadcast deal with Five. Five is wholly owned by RTL Group, one of the world's largest media businesses.

Kalahari Minerals PLC (AIM: KAH) confirmed it raised a further £10 million following the receipt of irrevocable commitments to subscribe for secured convertible loan notes.

Metals Exploration PLC (AIM: MTL) said resource drilling for the definitive feasibility study (DFS) for the Runruno gold-molybdenum project in the Philippines is ahead of target, with over 45,000 metres of the planned 65,000 metre programme for 2009 already complete.

South American focused mineral exploration and development company Minera IRL (LSE: MIRL) announced today it has reached a joint venture agreement with Collingwood Peru S.A.C. to explore the Veca exploration lease in central Peru, adding another South American project to its portfolio.

Precious metal explorer, Mariana Resources (AIM & PLUS: MARL) confirmed that drilling had commenced at its 100% owned Dos Calandrias epithermal gold-silver project.  The project it situated within the Deseado Massif in Santa Cruz Proviince, Southern Argentina.

Cohort Plc (AIM:CHRT) has announced that its wholly-owned subsidiary, Systems Engineering & Assessment Ltd  (SEA), has been selected as the preferred bidder to supply the External Communication System (ECS) for the Royal Navy’s ASTUTE Boat 4.

Plant Impact (AIM: PIM), a developer of technologies that improve crop productivity, announced today it has appointed a new Scientific Advisory Board (SAB) to add more commercial development experience and expertise to the decision making processes within the company.

Merchant Securities plc (AIM:MERC), have announced the acquisition of privately owned Cavendish Young Ltd. The deal consists of an initial payment of £65,000 with agreed deferred payments of up to £1.3m subject to the group’s performance between now and 2014. Specifically the terms relate to the future profitability of Cavendish Young and the amount of funds which come under the discretionary management of the Group.

Horizonte Minerals PLC (AIM: HZM) reported results for the first half to end-June 2009, saying it has made “excellent progress during the last six months despite difficult market conditions”.

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